Risk of EU energy supply failure on the rise

EU member states must work together to ensure Europe has a secure supply of energy, writes Elmar Brok.

By Elmar Brok

15 Dec 2014

Events in Ukraine have propelled energy security back to the top of the EU’s foreign policy agenda. Russia’s actions have led to sharper consideration of the need for energy diversification, with Moscow closing gas supplies to Ukraine and the Russian gas exporter Gazprom ceasing exports to Ukraine in June. With both energy consumption and dependency on oil and gas imports growing - the EU’s 28 member states import over 53 per cent of their energy − the risk of supply failure is rising. For the EU, this has one clear implication: it cannot continue to depend on an unreliable energy supplier, which is using energy as a political tool. Securing European energy supplies is therefore high on the EU’s agenda. It must develop the alternatives necessary to stand up to Russia without worrying about its energy supply.

This was also one of the conclusions of the sixth EU-US energy council meeting in Brussels in the past fortnight with the goal of enhancing Europe’s energy security. The EU and the US agreed to stand shoulder-to-shoulder in support of Ukraine’s new government and reaffirmed that energy should not be used as a political tool.

Energy security starts with an integrated energy market. Commission president Jean-Claude Juncker has endorsed the idea, proposed to Maroš Šefčovič, of creating an energy union by establishing a specific a vice-presidential portfolio in the 2014 commission. Building a functioning energy market would bring enormous benefits for European consumers and manufacturing industries. Competition would lead to lower energy prices and all member states could profit from a diversified energy supply and enhanced security of supply. According to the commission, a fully integrated gas market could save Europeans up to €30bn annually.

"According to the European commission, a fully integrated gas market could save Europeans up to €30bn annually"

If member states are united and build an internal energy market together, this will not only benefit its citizens and industry, but it will also demonstrate to Russia that it has exceeded the limits of the EU’s tolerance.

We should not forget that Russia needs the EU for its market and investment, more than member states need Russia. It depends on its oil and gas exports to Europe and a period of prolonged uncertainty would have serious implications for Gazprom and Russia.

The European commission’s ongoing antitrust investigation of Gazprom’s alleged abuse of its dominant position in the gas market provides a good basis for a stronger stance. It demonstrates that the EU is ready to challenge Russia to play by the rules.

This also applies to the recent deal between president Vladimir Putin and Turkish president Recep Tayyip Erdoğan that is intended to strengthen economic ties between the two nations and make Turkey the major hub for Russian gas in the region - after Moscow abandoned the south stream project due to the lack of financial possibilities and the economic problems in Russia. The EU now has to observe if this new economic cooperation might be a threat for European energy security.

"The tension with Russia has obliged the EU to boost its energy security mechanisms and seek alternatives to Russian gas"

Another step is to find alternative sources of supply from outside the EU. In response to the political crisis in Ukraine and the overall importance of a stable and abundant supply of energy for the EU’s citizens and economy, the commission released an EU energy security strategy in May 2014, which includes stress tests on Europe’s gas system to assess the impact of a potential gas crisis. With the union’s reserves - at present at 90 per cent - the EU is well prepared.

Nevertheless, the tension with Russia has obliged the EU to boost its energy security mechanisms and seek alternatives to Russian gas. While environmental and safety considerations must remain the highest priority, member states should continue to explore possibilities in new technologies and the potential for unconventional oil and gas within the EU. Some options include: increasing liquefied natural gas (LNG) imports from Algeria, Qatar or Nigeria, increasing gas imports from Norway and exploring the possibility to export shale gas from the US.

There is a great potential in the southern gas corridor. Azerbaijan has already committed to providing 10 billion cubic metres of gas and more from Turkmenistan is possible, if negotiations on a trans-Caspian pipeline are successful.

The EU can only succeed if all member states stick together and start implementing a common energy policy. This also means that member states must include energy efficiency measures in their national energy plans. Increasing energy efficiency across the EU would not only help to decrease dependency on foreign energy imports, but would also reduce energy costs for consumers and bring down EU emissions. It is time for all EU member states to recognise that they are stronger together than alone when dealing with energy security.

 

Read the most recent articles written by Elmar Brok - Energy sector set to drive EU-Algerian relations over the coming years

Share this page